Criminal Justice News

Tuesday, September 11, 2012

Convictions Entered in Two Separate Texas Cases Involving Stem Cells

HOUSTON—Francisco Morales, 52, of
Brownsville, Texas, and Illinois resident Lawrence Stowe, 59, have entered
guilty pleas in a conspiracy to introduce misbranded and unapproved new drugs
into interstate commerce, United States Attorney Kenneth Magidson announced
today along with Patrick J. Holland, special agent in charge of the Food and
Drug Administration (FDA)-Office of Criminal Investigations. Stowe and Morales
both falsely represented they were licensed to practice medicine and that they
each operated a medical clinics in Brownsville.

Just moments ago, Stowe admitted that
beginning in January 2006, he utilized several businesses, Stowe BioTherapy
Inc. and The Stowe Foundation, to advertise and promote a medical treatment
protocol for the treatment of amyotrophic lateral sclerosis (ALS), also known
as Lou Gehrig’s disease; multiple sclerosis (MS); Parkinson’s Disease; and
other neurological diseases. This treatment protocol, which was named “Applied
Biologics,” consisted of supplements, vaccines, patient-specific transfer
factors, and, ultimately, stem cell therapy. Stowe falsely represented to
patients that this treatment protocol had been reviewed by all levels of the
FDA and was effective in the treatment of ALS, MS, and Parkinson’s. There is
currently no cure for these diseases.

“These pleas are a victory for the
American public, in demonstrating the FDA’s commitment to investigating cases
of individuals and businesses that prey on the sick and vulnerable with phony
medical treatments,” said Holland. “The FDA will continue to aggressively
pursue perpetrators of such acts and ensure that they are punished to the full
extent of the law.”

Stowe entered a plea of guilty today to
conspiring with Morales and others to introduce supplements, vaccines, and stem
cells that were not approved by the FDA, as well as introducing a misbranded
and unapproved new drug called Immune Factor G-40 into interstate commerce,
which had not been reviewed or approved by the FDA for human use.

Stowe further admitted that one of the
unapproved drug products was a product called patient-specific transfer
factors. In order to produce this product, he obtained the services of a
pathologist in Bryan/College Station, Texas. He then directed patients to send
samples of their blood to the pathologist for the purpose of growing bacteria
that would later be used to create the patient-specific transfer factors. Stowe
hired a laboratory in South Carolina to receive the bacteria, which was then
fed to chickens. The eggs produced by these chickens were later freeze-dried,
and the powder from the eggs was placed in capsules and sold to patients. Stowe
admitted he knew the manufacturing process and the product itself were not
approved by the FDA for that treatment of human diseases.

In January 2010, a person diagnosed with
ALS had contacted Stowe about his treatment protocol. Stowe informed this
person he would benefit from the treatment protocol and falsely stated it had
been reviewed by all levels of the FDA. As a result, Stowe was paid $47,000 for
drug products not approved for the treatment of any human disease.

On September 5, 2012, Morales was also
convicted in this case. He admitted he sold an unapproved drug product to Stowe
called SF 1019 knowing Stowe would sell this product to patients. Morales
falsely represented to the public that he had extensive training and experience
regarding stem cells and stem cell therapy, when his exposure was actually
limited to attending seminars and reading materials published by researchers.

In June 2006, he received $8,300 from a
couple to perform an unapproved stem cell procedure involving stem cells on
their minor son who had experienced neurological problems after a near-drowning
incident. Prior to performing the procedure, Morales falsely represented that
the stem cell procedure would be beneficial to combat the child’s medical
condition. He also falsely represented to two other patients that he obtained stem
cells from private universities and had treated more than 1,000 patients using
stem cells with only positive results.

Today, Morales also pleaded guilty in a
second case for introducing stem cells extracted from umbilical cords into
interstate commerce and introducing an unapproved new drug into interstate
commerce.

Beginning in January 2007, he purchased
stem cells from a company called Caledonia Consulting, located in Mt. Pleasant,
South Carolina. After acquiring stem cells from Caledonia, he would travel to
Mexico and perform stem cell procedures, knowing the FDA had not approved the
use of stem cells to treat human diseases. Morales further admitted that in
April 2009, he began purchasing vials containing stem cells from a company
called Global Laboratories.

Morales was charged in this case along
with Alberto Ramon, 50, of Del Rio, Texas, and Vincent Dammai, 42, of Mount
Pleasant, South Carolina, who are set for trial on November 26, 2012. They are
presumed innocent unless convicted though due process of law.

Morales faces up to five years in prison
and a $250,00 fine for each of the two conspiracy convictions, as well as up to
three years for introduction of an approved drug into interstate commerce.
Stowe faces the same five-year sentence and $250,000 fine for one conspiracy
conviction and up to three years and additional fines for each conviction of
introduction of a misbranded drug and introduction of an unapproved drug into
interstate commerce.

The cases were investigated by the FDA
and the FBI, with assistance from Internal Revenue Service-Criminal
Investigation. Assistant United States Attorneys Samuel Louis and Cedric
Joubert prosecuted the case, with the assistance of Carol Wallack with the
Department of Justice Civil Division’s Consumer Protection Branch.